government spending dropped, most dramatically in the defense sector. the report, though, also contained some positive developments: consumer spending and business investment were both up. and yesterday, the so-called case-shiller index found that housing prices grew in 20 major cities by an average of 5.5% over the previous year. it was the biggest gain in six years. we talk it through, with joel naroff, an economist, who heads his own consulting firm in pennsylvania. and roben farzad, a senior writer with bloomberg businessweek. joel naroff, let me start with you. this was a surprise to most people. what's behind the kr-pgs last quarter? >> well, it was largely the government's doing between the largest cutback of 40 years in defense which took well over a percentage point of growth out and the fears of falling off the fiscal cliff which caused businesses to be really, really cautious in their inventories and they failed dramatically, taking another percentage point or more out. those were the basic reasons. but, you know, as was noted, when you look